SuperworthMicrosoft MSFT
- Market cap
- $3.9T
- PE
- 29.2×
- 10y median 33.0×
- Forward PE
- 26.7×
- 10y median 28.2×
- Price to sales
- 11.7×
- EV/EBIT
- 24.9×
- Revenue, 12 months
- $331.8B
- +18% on a year ago
- Net margin
- 40.3%
- Free cash flow yield
- 1.7%
A Superworth story
Cheaper on earnings, pricier on cash
Earnings keep rising while free cash flow falls. The gap is the AI build-out, and today's price assumes it pays off.
Earnings kept compounding
Earnings per share over the last twelve months rose by about three quarters since September 2023, to 17.96 dollars. Part of that is net gains on Microsoft's investment in OpenAI. Its adjusted figure, which leaves them out, is 17.28, still up about two thirds. Nothing in the profit line suggests a business in trouble.
But the stock is about where it was a year ago
Market value is about 4 trillion dollars, a little above a year ago and just below the high it set on 13 October, while earnings kept rising. In between it lost about a third of its value by late June, then climbed back by half.
So the PE sits below its usual level
The PE, the price divided by the last year's reported earnings per share, is about 30. With earnings up, it sits below its three year median of 35 and below the typical peer. On the earnings analysts expect next, the gap closes: the forward PE is in line with its peers and its own ten year median, a history partly rebuilt from today's forecasts.
Cash flow fell while profit rose
Free cash flow, the cash left after capital spending, peaked at 78 billion dollars a year in September 2025 and is 67 billion now, while profit rose by almost a third over the last fiscal year. The gap is spending on data centres and the chips inside them.
On cash, the priciest in ten years
Price to free cash flow, the price divided by free cash flow per share, is about 59, near its highest in ten years. Investors pay about 30 times profit but twice that for the cash the business actually keeps, because capital spending takes cash today and reaches profit only over years.
The price needs the build-out to pay
Azure, Microsoft's cloud, grew 43% in the June quarter, and analysts expect sales in the year to September 2027 almost a quarter above the last reported year. At today's price that makes the stock about 26 times the adjusted earnings they expect for that year. The payoff is already in the forecasts.
The 28 October report is the first check
The September quarter is the first report to put a dollar figure on Azure. Analysts expect revenue of 90.6 billion dollars and adjusted earnings of 4.72 a share. If free cash flow climbs back while Azure grows, the PE was the better guide. If it keeps falling, the cash multiple was.
What has happened lately
- Microsoft, Microsoft commits more than $10 billion to cloud and AI infrastructure in four Gulf states through 2030Over $10B of capital and operating spending in Kuwait, Qatar, Saudi Arabia and the UAE, plus $400M+ for connectivity, adds to the capex and depreciation path.
- Microsoft, Microsoft raises quarterly dividend 8% to $0.98 per shareRaises the annual payout while capital spending runs at record levels, which shows how much cash goes back to shareholders versus into the build-out.
- SEC, Microsoft moves to two reporting segments and will disclose Azure revenue in dollars from FY27Ends Azure's growth-rate-only reporting and redraws the segment lines, which changes the inputs available for modelling and peer comparison.
- Microsoft, Microsoft Q4 FY26: revenue $90.0B, up 18%, with Azure up 43% and past $100B for the yearSets the base for cloud growth, segment margins and EPS, with Azure annual revenue crossing $100 billion for the first time.
Headlines link to the original source.
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Why a stock is priced where it is, one chart at a time.
Charts
Financials
| Income statement | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Q1 FY26 | Q2 FY26 | Q3 FY26 | Q4 FY26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $56.5B+13% | $62B+18% | $61.9B+17% | $64.7B+15% | $65.6B+16% | $69.6B+12% | $70.1B+13% | $76.4B+18% | $77.7B+18% | $81.3B+17% | $82.9B+18% | $90B+18% | |
| Cost of revenue | $16.3B+6% | $19.6B+12% | $18.5B+15% | $19.7B+17% | $20.1B+23% | $21.8B+11% | $21.9B+18% | $24B+22% | $24B+20% | $26B+19% | $26.8B+22% | $29.5B+23% |
| Gross profit | $40.2B+16% | $42.4B+20% | $43.4B+18% | $45B+14% | $45.5B+13% | $47.8B+13% | $48.1B+11% | $52.4B+16% | $53.6B+18% | $55.3B+16% | $56.1B+16% | $60.5B+15% |
| R&D | $6.7B+1% | $7.1B+4% | $7.7B+10% | $8.1B+20% | $7.5B+13% | $7.9B+11% | $8.2B+7% | $8.8B+10% | $8.1B+8% | $8.5B+7% | $8.9B+9% | $10B+13% |
| SG&A | $6.7B+2% | $8.2B+3% | $8.1B+10% | $9.1B+8% | $7.4B+11% | $8.3B+1% | $7.9B−2% | $9.3B+2% | $7.5B+2% | $8.5B+3% | $8.7B+10% | $9.9B+7% |
| $26.9B+25% | $27B+33% | $27.6B+23% | $27.9B+15% | $30.6B+14% | $31.7B+17% | $32B+16% | $34.3B+23% | $38B+24% | $38.3B+21% | $38.4B+20% | $40.6B+18% | |
| Interest expense | $525M+5% | $909M+86% | $800M+61% | $701M+45% | $582M+11% | $594M−35% | $594M−26% | $615M−12% | $698M+20% | $736M+24% | $778M+31% | $839M+36% |
| Pre-tax income | $27.3B+27% | $26.5B+30% | $26.7B+18% | $27.3B+10% | $30.3B+11% | $29.4B+11% | $31.4B+17% | $32.6B+20% | $34.3B+13% | $48.2B+64% | $39.3B+25% | $44B+35% |
| $5B+24% | $4.7B+19% | $4.8B+10% | $5.2B+12% | $5.6B+12% | $5.3B+13% | $5.6B+16% | $5.4B+3% | $6.6B+17% | $9.8B+86% | $7.6B+36% | $8.3B+54% | |
| Net income | $22.3B+27% | $21.9B+33% | $21.9B+20% | $22B+10% | $24.7B+11% | $24.1B+10% | $25.8B+18% | $27.2B+24% | $27.7B+13% | $38.5B+60% | $31.8B+23% | $35.8B+31% |
| $2.99+27% | $2.93+33% | $2.94+20% | $2.95+10% | $3.30+10% | $3.23+10% | $3.46+18% | $3.65+24% | $3.72+13% | $5.16+60% | $4.27+23% | $4.81+32% | |
| 7.5B−0% | 7.5B−0% | 7.5B+0% | 7.5B+0% | 7.5B+0% | 7.5B+0% | 7.5B−0% | 7.5B−0% | 7.5B−0% | 7.5B−0% | 7.4B−0% | 7.4B−0% |
Gross profit: 16 periods, Q1 FY09 to Q4 FY12: not printed by the filing, worked out from its own lines.
Net income: 6 periods, Q4 FY21 to Q4 FY26: printed in the fourth-quarter results release.
EPS, diluted: Q4 FY09 and Q1 FY16: quarter's net income to common over its shares, to the cent. 6 periods, Q4 FY21 to Q4 FY26: printed in the fourth-quarter results release.
Diluted shares: 10 periods, Q4 FY09 to Q4 FY20: share-days: the 12-month average less the 9-month, weighted by days. Q4 FY12 and Q4 FY15: a loss quarter: its basic count, share-days: the 12-month average less the 9-month, weighted by days. 6 periods, Q4 FY21 to Q4 FY26: printed in the fourth-quarter results release.
From each company's 10-Q and 10-K filings, the newest version of each figure. Quarters are as filed (a fourth quarter is the year less its first nine months), fiscal years as the 10-K prints them, restated where a later 10-K restated them, and balance sheet lines as of the period's end. A quarter whose 10-Q isn't filed yet is from the company's results release. Growth is on the same period a year earlier. A dash is a period with no figure for the line: the filing doesn't print it, or it hasn't been read yet. Figures from older filings without data tags, and from a results release before its 10-Q, are read from the document's text and checked against it.
Estimates
Next earnings report: .
| Quarter | Revenue | Range | EPS | Range | Analysts |
|---|---|---|---|---|---|
| Q1 FY27 | $90.6B | $90.3B to $91.4B | $4.71 | $4.62 to $4.85 | 20 |
| Q2 FY27 | $95.6B | $94.9B to $96.2B | $4.84 | $4.71 to $4.95 | 19 |
| Q3 FY27 | $98.2B | $96.8B to $99.9B | $4.90 | $4.80 to $5.01 | 8 |
| Q4 FY27 | $106.4B | $104.9B to $108.3B | $5.19 | $5.09 to $5.31 | 8 |
| Q1 FY28 | $108.1B | $106.5B to $110B | $5.52 | $5.41 to $5.64 | 8 |
| Q2 FY28 | $114.4B | $112.7B to $116.4B | $5.75 | $5.64 to $5.88 | 14 |
| Q3 FY28 | $117.7B | $115.9B to $119.7B | $5.90 | $5.79 to $6.04 | 14 |
| Q4 FY28 | $127.6B | $125.7B to $129.8B | $6.33 | $6.20 to $6.47 | 10 |
Peers
Companies in Technology nearest Microsoft's size, closest first.
| Company | Market cap | PE | Its 10y median PE | Fwd PE | P/S | Revenue growth | Net margin |
|---|---|---|---|---|---|---|---|
| MSFTMicrosoft | $3.9T | 29.2× | 33.0× | 26.7× | 11.7× | +18% | 40.3% |
| AAPLApple | $5.1T | 39.9× | 28.0× | 37.5× | 10.9× | +14% | 27.6% |
| NVDANVIDIA | $5.1T | 26.7× | 54.4× | 17.5× | 16.8× | +83% | 63.7% |
| AVGOBroadcom | $1.5T | 41.1× | 46.3× | 18.6× | 17.2× | +49% | 42.9% |
| MUMicron Technology | $992.9B | 11.8× | 18.1× | 5.0× | 7.5× | +256% | 63.8% |
| AMDAdvanced Micro Devices | $843.6B | 133× | 106× | 45.7× | 20.4× | +40% | 15.6% |
| PLTRPalantir Technologies | $472.8B | 168× | 252× | 104× | 76.8× | +79% | 49.0% |
| INTCIntel | $438.6B | n/m | 13.3× | 50.0× | 7.7× | +7% | −19.8% |
| CSCOCisco Systems | $419.9B | 31.9× | 18.8× | 20.9× | 6.6× | +12% | 21.0% |
| Peer median | $918.3B | 39.9× | 37.1× | 29.2× | 13.8× | +44% | 35.3% |
Investors who own it
Investors we follow who held Microsoft at the end of Jun 30, 2026, from their 13F filings.
- Bill AckmanPershing Square11.9% of portfolioadded
- Polen CapitalPolen Capital6.7% of portfoliotrimmed
- Brad GerstnerAltimeter Capital4.8% of portfolioadded
- Terry SmithFundsmith4.4% of portfoliotrimmed
- Chase ColemanTiger Global Management3.5% of portfoliotrimmed
- Lee AinslieMaverick Capital2.8% of portfolioadded
- Philippe LaffontCoatue Management2.3% of portfolioadded
- Andreas HalvorsenViking Global Investors1.6% of portfoliotrimmed
- Tom GaynerMarkel Group1.5% of portfolio
- Baillie GiffordBaillie Gifford0.9% of portfoliotrimmed
- Ron BaronBaron Capital0.0% of portfoliotrimmed
- Bill NygrenHarris Associates (Oakmark)0.0% of portfolioadded
More on Microsoft
Each number over time
- PE ratio
- Forward PE
- Price to sales ratio
- EV/EBIT
- Price to free cash flow
- Price to book ratio
- Dividend yield
- Market cap
- Revenue
- EPS
- Free cash flow
- Profit margin
- Shares outstanding
Where it ranks
- #5of 137Infrastructure software stocks with the highest profit margins
- #6of 17Infrastructure software stocks with the lowest PEG ratio
- #9of 21Infrastructure software stocks with the lowest forward PE
Its groups
About
- Chief executive
- Satya Nadella, since 2014Joined 1992, CEO since 2014.
- Industry
- Software - Infrastructure
- Sector
- Technology
Valuation data, not investment advice. Prices as of .